Purchase Order Confirmation Best Practices

Step 1: Get your vendors on board!

🗸 Unless you’re buying donuts from Aunt Jo’s bakery, your vendors should be confirming orders electronically (and maybe Aunt Jo can too)

– EDI purchase orders demand an EDI acknowledgement (855)

– Check with your vendors for current capabilities

– As you identify new vendors for upcoming contracts, make sure they’re 855-ready

– If you’re placing orders via email, make sure vendors are sending a confirmation email so you can identify any backorders, price discrepancies, delays

Step 2: Manage confirmations every day! They’re game changers

🗸 Implement tools that allow you to easily identify and solve discrepancies, including back orders

🗸 Create policies and procedures for managing confirmations

– Daily review will reduce cost of identifying, fixing discrepancies on the back-end

– Determine who can make the decision needed to manage discrepancies – and accept or deny changes or substitutions, and reject changes if needed

Step 3: Your new mantra is “manage by exception!” Managing confirmations on the front end will streamline everything that follows –

🗸 Everything that matches can flow right through your system

🗸 Identify items where discrepancies are flagged

🗸 Pave the way for downstream automation, especially in Accounts Payable

Step 4: Set up a process to manage phone orders

🗸 If you have to call orders in – instead of creating an electronic PO – be sure to confirm confirmation number from the vendor

– Have the vendor send an electronic confirmation (EDI or email)

– Save confirmation numbers and documents for audit purposes, documentation, control

– It’s not too late to reconsider and create an electronic purchase order! It’ll save time and provide a better audit trail in the long run

Step 5: Evaluate ongoing vendor performance

🗸 Start with their capabilities to confirm orders electronically

🗸 Then track overall statistics

– Percentage of on-time delivery

– Price accuracy

– Back order rates

– Percentage of order fulfillment

Step 6: Then, set up a process to evaluate your performance!

🗸 Set benchmarks for your current discrepancy rates, overall fill rates, on-time order deliveries

– Track for 3 to 6 months to see if you’re improving

– If you’re fixing inaccurate product and pricing data as it’s identified, your discrepancy rates should be declining

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